ASF: are there trading opportunities beyond China?
Besides China, African swine fever (ASF) is now affecting several other key pig meat trading countries. These include Vietnam, the Philippines and South Korea. We explore the supply and demand impact on these countries and what it might mean for global trade.
For the full year of 2019, Vietnam imported 174,400 tonnes of pig meat*. Over three-quarters of this was pig offal, imported mostly from Europe and the US. Over the same period, Vietnam imported 26,200 tonnes of fresh/frozen pork, mostly from Brazil (11,300 tonnes).
The first reports of ASF in Vietnam arose in February 2019. This has led to the cull of about 5.9 million pigs so far, approximately 21% of the country’s pig herd. Some reports suggest actual losses could be even higher. Gira Foodservice estimates that Vietnamese pig meat production fell by 17% in 2019, and could fall by a further 52% in 2020.
As with Vietnam, offal makes up the bulk of Philippine pig meat imports. In the first 11 months of 2019, the Philippines imported 288,000 tonnes of pig meat, according to national statistics. Two-thirds of this was pig offal, mostly imported from Europe and the US. Over the same period, the Philippines imported 89,000 tonnes of fresh/frozen pork. A third of this was from Canada (35,500 tonnes), with notable supplies from Europe and the US.
Up until 2019, Philippine pig meat imports had been growing steadily. However, the country reported its first cases of ASF in July 2019 and consequentially banned imports from other affected countries. It also banned pork from Germany, which had been a top supplier, after a shipment was found to contain Polish pork. As a result, imports of pig meat (incl. offal) from Jan-Nov 2019 were down 12% on the same period in 2018. Falling demand may also have played a part.
OIE figures show that nearly 192,000 Filipino pigs have been killed due to ASF so far (approximately 1.5% of the nation’s pig herd). Although production still increased a little in 2019, according to both USDA and Gira estimates, a decline is expected in 2020. Gira anticipates that production will drop by 20% in 2020 with a 15% drop in consumption. USDA estimates are less severe, with a 10% drop in production forecast.
By contrast, the majority of South Korea’s pig meat imports are fresh/frozen pork (525,000 tonnes in 2019), mostly from the US, Germany and Spain. Import volumes from all these suppliers fell from 2018, leading to total imports of fresh/frozen pork dropping 8% year-on-year.
ASF was first reported in South Korea in September 2019. Between then and November, it is reported that around 380,000 pigs have been killed a result (approximately 3% of the national herd). Gira Foodservice expects production will reduce by 4% this year as a result, assuming that the disease remains under control.
What are the trade opportunities?
With falling production anticipated in these countries, higher imports are expected, to help meet demand.
The latest USDA forecasts expect a 25% (+60,000 tonnes) increase to the Philippines and a 1% (+10,000 tonnes) increase to South Korea. The USDA Livestock and Poultry report does not include import forecasts for Vietnam, though both Gira and Rabobank are expecting import growth this year.
However, imports may be affected by several factors:
- The severity and spread of ASF in each country (including supplier countries, namely Germany)
- Domestic demand; if consumers move away from pork to other proteins, especially in China, this may reduce import volumes
- The effect of elevated pork prices as countries compete for available supplies
- Infrastructure limitations in receiving countries, particularly Vietnam
Production has been expanding in the US and Brazil in response to strong Asian demand. It seems likely these suppliers will pick up on the additional export opportunities this year. Rising export demand is also expected to stimulate some modest growth in pork production in Europe. This, combined with a relatively stagnant domestic market, may also mean it’s likely more EU pork will be exported this year. Although, local ASF threats remain a risk to trade.
The UK currently has a small share of the Philippine and South Korean pig meat markets, so may be able to benefit from demand growth in these regions. However, this would only be if prices offered could compete with China and the domestic market. The UK does not have market access to Vietnam for pig meat currently.
*Bill of lading data as published by IHS Maritime & Trade- Global Trade Atlas®